General Electric‘s dividend could still be in danger even after the industrial giant slashed it in half, an analyst at JPMorgan said Tuesday.

“The cut was within the realm of possibility, and is fundable in the near term with debt and asset sales, though a downturn or spin/split would make for another chapter in this debate,” JPMorgan analyst C. Stephen Tusa said in a note Tuesday.

On Monday, GE cut its dividend by 50 percent to 12 cents a share at an investor meeting, the largest dividend cut by a U.S. company outside of the financial crisis. Prior to Monday, GE had only cut its dividend twice since 1899. The cut was made as CEO John Flannery tries to turn around the 125-year-old conglomerate.

By cutting the dividend yield, which was the second-highest among Dow Jones industrial average stocks, Flannery has more capital to fund GE’s turnaround. However, it could also make long-time shareholders flee.

At current prices, GE’s yield under the new dividend (effective in December) would be 2.5 percent.

GE on Monday also cut its 2018 earnings forecast to $1 per share to $1.07 per share.

“Keeping it simple and using adjusted numbers at $1.00, with sector low FCF conversion,
significantly lower GAAP numbers and limited growth through 2020, we think a discount is warranted and our $17 PT now seems generous at a 4.3 percent FCF yield (on normalized 2019 FCF vs sector at 5.5 percent) and 2.8 percent div yield, triangulating around a dividend that still represents a 65 percent payout,” wrote Tusa.

GE is by far the worst-performing stock in the Dow this year, falling nearly 40 percent. It is also one of only 6 Dow components that were are lower for 2017 as of Monday’s close. In contrast, the Dow has risen sharply this year, gaining 18.6 percent.

The company also issued profit and free cash flow guidance for 2018 on Monday that disappointed Wall Street analysts. GE also announced it would cut its number of board seats and that it will focus on its health care, aviation and energy businesses moving forward.

GE shares dropped 7.2 percent on Monday, marking their worst day since 2009. On Tuesday, the stock fell 2 percent in early trade.

“We, like Bulls, had expected more, and most notably the cost out targets here were not as ambitious as most expected,” JPMorgan’s Tusa said.

Source: Investment Cnbc
JPMorgan: Even after 50% cut, GE dividend may not be safe